fixed-rate bonds - 6.70 per cent the peak?

free4440273

just wanted people's view if you don't mind on whether folk here think 6.70 is the peak for fixed-rate bonds - for this year and maybe even several years (after all, unlikely that rates will rise even further in 2008?). It's getting increasingly difficult to even achieve 6.70 at the moment - many of these have been 'pulled' quite recently. would appreciate people's thoughts. my nationwide bond expires in october and am looking to re-invest but probably not with nationwide - good service but rates not competitive enough. thanks all. I do appreciate it

Reaper

The fixed rates fluctuate depending on what the market thinks is going to happen to interest rates in the future.

Until the recent market wobbles it was widely assumed that there would be one more 0.25% interest rate rise but that would be it for a while. Fixed rates were largely based on that assumption.

Now the markets are looking fragile many expect the next rate rise to be delayed or maybe not even happen which is why some fixed rate deals have gone.

Some now even think the rate rise may be back on. The truth is nobody really knows, least of all me.

In the end both fixed rate and variable rates are gambles. Look at it this way - Ice Save pay 6.2% and pass on rate rises promptly. So one more rate rise would pay 6.55% and you would still be better off with your fixed deal. If there were 2 rate rises it would be 6.8% and you would be slightly worse off.

Personally speaking I think 6.7% sounds like good deal if you are sure you don't need access to the money.

free4440273

i agree 6.70 for a fixed rate is a good deal. trouble is it's getting increasingly difficult to find any; they seem to have been pulled recently. i am after a three year fixed rate bond at 6.70.

isofa

The only ones I can find at the moment that are 6.7% are the Birmingham Midshires bonds, but all are 1 year rather than 3.

baby_boomer

I personally invested the remaining cash part of my funds in the Loughborough 6.71% 2 Year Bond, the Principality 6.75% 2 Year Members' Bond and the Scarborough 3 Year 6.5% Bond.

So that's a gamble / gut reaction on medium term interest rates peaking.

free4440273

baby_boomer wrote: »

I personally invested the remaining cash part of my funds in the Loughborough 6.71% 2 Year Bond, the Principality 6.75% 2 Year Members' Bond and the Scarborough 3 Year 6.5% Bond.

So that's a gamble / gut reaction on medium term interest rates peaking.

BB, thanks, i've just looked at the scarborough website and it's their three year monthly bond that i am interested in (paying 5 per cent net). can i just ask: has your experience with SB been good. do they send you a certificate upon opening of the account. was the account opened without any real probs. i don't have a branch where i live, so would have to open via post. thanks, sorry for so many questions.

baby_boomer

They recently didn't send an application form I asked for (by phone), but generally they are OK - except that their Yorkshire mean streak means they do without pre-paid envelopes .

free4440273

thanks BB. but generally, as far as the opening of the bond was concerned, they dealt with you fairly and sent you a certificate?

baby_boomer

Very straighforward. I got a "transaction advice" to confirm by return post, not a certificate. However, I did have the advantage of transferring some funds from an existing Scarborough account.

Scarborough Direct is a dedicated postal part of the society, so they are reasonably geared up to deal with demand on a national scale.

bristolleedsfan

baby_boomer wrote: »

They recently didn't send an application form I asked for (by phone), but generally they are OK - except that their Yorkshire mean streak means they do without pre-paid envelopes .

quite a few building societies have stopped supplying postage paid reply envelopes or if they do supply then they are supplied second class.

scarboroughs invest direct service has always been excellent re transactions, not the best at answering emails though.

baby_boomer

bristolleedsfan wrote: »

quite a few building societies have stopped supplying postage paid reply envelopes

Scarborough never started :rotfl: